Teaching kids about money hard for paycheck-to-paycheck parents

Parents want to be good financial role models for their children, but many are facing financial problems of their own and don't know where to start.

More than two-thirds of parents said they are "very or extremely concerned" about setting a good financial example for their children, according to a survey released this week by the investment management firm T. Rowe Price. Yet 1 in 4 parents said they're "not good with money" so they don't think they should be the ones to teach their kids about it.

Many parents don't want to talk to their kids about finances, often because they don't want them to worry about the financial challenges the family may be facing, financial advisors say. Others just don't think they're prepared to have the conversation.

"A lot of parents think they don't know enough about money themselves, so they're reluctant to talk about it," said Stacy Francis, a New York certified financial planner who is also founder of "Savvy Ladies," a nonprofit financial empowerment organization for women.

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"Parents in huge amounts of debt or living paycheck to paycheck think they're least qualified to talk to their kids when they may be most qualified," Francis said. "They can share what's been working and what's not been working."

Some parents believe they have to know all the answers—they may not—and that is OK, financial advisors say. More important is that they encourage good financial behavior, but that's not always easy to figure out how to do.

"The relationship with parents, kids and money is pretty complicated," said Stuart Ritter, a certified financial planner with T. Rowe Price. "One of the things we learned from parents is they'll borrow money from their kids to tip the babysitter. Hopefully they're putting it back. And they're bribing their kids. They're using the money as a reward."

Nearly half of the 1,000 parents surveyed in the new T. Rowe Price report admit they bribe their kids with money to encourage them to do the right thing. And when parents run out of cash, almost one-third admitted they sometimes "borrow" money from their childrens' piggy banks.

The piggy bank may not hold thesame cachet for kids today that it did when their parents were growing up. Most of the financial transactions they see made are on a mobile phone or laptop. Of the 924 kids ages 8 to 14 who participated in the survey, 54 percent said they use and make purchases on mobile apps and 61 percent shop online. Even a third of parents said cash has become "obsolete."

Still, a great way to get the conversation started is to give children a cash allowance, said Francis. "It's a good way for kids to start to learn responsibility—allowing them to spend a portion now, save some for a big goal, save some for college and give a portion to charity."

There can be many teachable moments, agrees Ritter. Parents just need to be more proactive to incorporate money matters into the conversation.